ROSE ROCK MIDSTREAM GP, LLC CORPORATE GOVERNANCE GUIDELINES AND PRINCIPLES OF THE BOARD OF DIRECTORS

Transcription

1 Reviewed December 11, 2014 ROSE ROCK MIDSTREAM GP, LLC CORPORATE GOVERNANCE GUIDELINES AND PRINCIPLES OF THE BOARD OF DIRECTORS Rose Rock Midstream GP, LLC (the GP ), as the general partner of Rose Rock Midstream, L.P. (the Partnership ), is responsible for the management of the Partnership. Thus, the corporate governance of the GP is, in effect, the corporate governance of the Partnership. The Board of Directors of Rose Rock Midstream GP, LLC (the Board ) believes that sound corporate governance policies and practices provide an essential foundation to assist the Board in fulfilling its responsibilities. Thus, the Board adopts the following Corporate Governance Guidelines and Principles for the GP and the Partnership. 1. Director Qualifications and Board Composition Independence and Qualifications. Subject to any phase-in periods permitted by applicable laws or regulations, the Board will have at least three directors who meet the criteria for independence as affirmatively determined annually in accordance with the New York Stock Exchange listing standards and applicable law. The Board is responsible for reviewing, on an annual basis, the composition of the Board as a whole as well as the appropriate skills and characteristics required of directors in the context of the current make-up of the Board and the needs of the Board given the circumstances of the GP and/or the Partnership. Qualifications considered by the Board for director candidates include an attained position of leadership in the candidate s field of endeavor, business and/or financial expertise, integrity, objectivity, independence, demonstrated exercise of sound business judgment, expertise relevant to the Partnership s lines of business, diversity of the candidate, corporate governance experience and the ability to serve the interests of all unitholders. The candidate must also be able to devote the time, energy and attention as may be necessary to properly discharge his or her responsibilities as a director. The invitation to join the Board should be extended by the Board itself via the Chairman of the Board. In addition to the criteria for director independence required by the New York Stock Exchange and applicable law, the Board will affirmatively determine that a director who qualifies as independent has no material relationship with the GP or the Partnership (either directly or as a partner, material equityholder or officer of an organization that has a relationship with the GP or the Partnership). In assessing the materiality of any existing or proposed director s relationship with the GP and/or the Partnership, the Board will consider all relevant facts and circumstances. Material relationships can include, but are not limited to, commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships. The Board should evaluate materiality not only from the perspective of the director, but also from that of persons and organizations with which the director has a relationship. The Board may adopt categorical standards to assist it in making determinations of independence. The basis for the Board s determination that a relationship is not material must be disclosed in the Partnership s annual report on Form 10-K. This disclosure may be stated in a general way for a director satisfying any categorical standards adopted by the Board and described in the Partnership s annual report on Form 10-K, but the determination must be specifically explained if no such standards are adopted or if a director does not satisfy them.

2 Size of the Board. The First Amended and Restated Limited Liability Company Agreement of the GP (as it may be amended and/or restated from time to time, the GP LLC Agreement ) provides that the Board shall consist of not less than three and not more than nine directors, as determined from time to time by action of the sole member of the GP. The Board may expand or contract within the limitations set forth in the GP LLC Agreement as the demands and responsibilities of the Board so dictate. Change of Status. It is the sense of the Board that any individual director who retires from or changes substantially the principal occupation, position or responsibility he or she held when he or she was elected to the Board should volunteer to resign from the Board. It is not the sense of the Board that, in every instance, a director who retires from or changes substantially the occupation, position or responsibility that he or she held when he or she came on the Board should necessarily leave the Board. There should, however, be an opportunity for the Board to review the continued appropriateness of Board membership under the circumstances. Other Directorships. Directors should advise the Chairman of the Board and the General Counsel in advance of accepting any invitation to serve on another company board. No director may serve on more than three other company boards without the prior review and approval of the Board. In determining whether to permit a director to serve on more than three other company boards, the Board should evaluate the potential for conflicts of interest between the Partnership and new company that might exist if the director accepted the new directorship, and should evaluate the individual circumstances of that director, including the scope and volume of competing demands for the director s time. Retirement Age; Term Limits. The Board does not believe it should establish either a mandatory retirement age or term limits. While these policies could help ensure that there are fresh ideas and viewpoints available to the Board, they carry the disadvantage of potentially causing the Board to lose the contribution of directors who have been able to develop, over a period of time, increasing insight into the Partnership and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to mandatory retirement and term limits, the Board will review each director s continuation on the Board every year. This will allow each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board. 2. Director Responsibilities Business Judgment; Indemnification. The basic responsibility of the directors is to exercise their business judgment in good faith to act in what they reasonably believe to be in the best interests of the Partnership and its unitholders. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of their fellow directors, senior executives and the outside advisors and independent auditors for the GP and the Partnership. The directors are also entitled to have the Partnership purchase reasonable directors and officers liability insurance on their behalf, to the benefits of indemnification to the fullest extent permitted by law and the GP LLC Agreement and any indemnification agreements, and to exculpation as provided by state law and the GP LLC Agreement. 2

3 Meetings. Directors are expected, to the extent reasonably practicable, to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Information and data that are important to the Board s understanding of the business to be conducted at a Board or committee meeting should generally be distributed to the directors before the meeting, and directors should use their reasonable best efforts to review these materials in advance of the meeting. Chairman of the Board and CEO. The Board has no policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer. The Board believes that this issue is part of the succession planning process and that it is in the best interests of the Partnership for the Board to make an individualized determination when it elects a new Chief Executive Officer. Matters to be Considered. The Chairman of the Board, with input from management, will establish the agenda for each Board meeting. At the beginning of the year the Chairman of the Board should establish a schedule of agenda subjects to be discussed during the year (to the degree they can be foreseen). Each Board member is free to suggest the inclusion of items on the agenda of any Board meeting. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review the Partnership s long-term strategic plans and the principal issues that the Partnership will face in the future during at least one Board meeting each year. Meetings of Outside Directors. Each regularly scheduled Board meeting will include an executive session of the non-management directors. If the non-management directors include a director who the Board has determined is not independent, the Board will also schedule at least once a year an executive session including only independent directors. Communications. While the Board believes that management speaks for the Partnership, individual Board members may, from time to time, meet or otherwise communicate with various constituencies that are involved with the Partnership. However, it is expected that Board members would do this with the knowledge of the management and, absent unusual circumstances or as contemplated by the charters of the Board committees, only at the request of management. 3. Board Committees Committees and Members. The Board will have an Audit Committee and a Conflicts Committee. Subject to any phase-in periods permitted by applicable laws or regulations, all of the members of these committees will be independent directors under the criteria established by the New York Stock Exchange and applicable law, including, in the case of the Audit Committee, Section 10A(m) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. In general, committee members will be appointed by the Board. Committee Charters. Each committee will have its own charter. The charters will set forth the purposes and responsibilities of the committees, as well as certain specific qualifications for 3

4 committee membership, committee structure and operations and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its performance and report the results of this evaluation to the Board. Committee Meetings. The Chair of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee s charter. The Chair of each committee, in consultation with the appropriate members of the committee and management, will develop the committee s agenda. At the beginning of the year, each committee should establish a schedule of agenda subjects to be discussed during the year (to the degree they can be foreseen). The schedule for each committee will be furnished to all directors. Minutes of such meetings will be prepared and will be kept with the permanent records of the GP. Independent Advisors. The Board and each committee have the power to hire at the Partnership s expense independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer in advance. Additional Committees. The Board may, from time to time, establish or maintain additional committees as necessary or appropriate. 4. Director Access to Officers and Employees Full Access. Directors shall have full and free access to officers and employees as well as the independent auditors and other outside advisors for the GP and the Partnership. Any meetings or contacts that a director wishes to initiate may be arranged through the Chief Executive Officer ( CEO ) or the Secretary or directly by the director. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Partnership and does not inappropriately disclose any confidential or sensitive information in the possession of the director and should, to the extent appropriate, inform the CEO of this contact or copy the CEO on any written communications between a director and an officer or employee. Non-Director Attendance at Board Meetings. The Chairman of the Board may designate guest attendees at any Board meeting to be present for the purpose of making presentations, responding to questions by the directors or providing counsel on specific matters within their area of expertise. 5. Director Orientation and Continuing Education All new directors should participate in the Partnership s orientation program, which should be conducted within three months of the time the new director joins the Board. This orientation should include presentations by or meetings with senior management to familiarize new directors with the Partnership s strategic plans and operations, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct and Ethics, its principal officers, and its internal and independent auditors. All continuing directors are also invited to attend the orientation program. From time to time, the Chairman of the Board or the Board may request management to make presentations to the Board on, or management may recommend to the Board, areas where 4

5 the Board may need enhanced understanding of a particular area relating to Partnership operations, policies or procedures. When such a request or recommendation is made, the Chairman of the Board should evaluate the request or suggestion and, if he or she determines it is appropriate, should include the presentation on the agenda for a future meeting of the Board. All directors are encouraged to attend director development programs and conferences that relate to duties of directors or other corporate governance topics or to other topics relevant to the work of the Board. 6. CEO Evaluation and Management Succession CEO Review. The Board will conduct an annual review of the CEO s performance in order to ensure that the CEO is providing effective leadership in the long- and short-term. Succession Planning. The Board will periodically review management development and succession plans with respect to senior management positions, and engage the CEO in such discussions. The Board will consider from time to time as appropriate potential successors to the CEO in the event of his or her sudden resignation, retirement or disability. The CEO will report at least annually to the Board on succession planning and programs for management development. 7. Annual Performance Evaluation The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Board should receive evaluations from all directors with an assessment of the Board s performance. The self-evaluation should focus on the Board s contributions and should specifically focus on areas in which the Board or management believes that the Board could improve. 8. Communicating with the Board The Board encourages effective communications with the Partnership s unitholders. Unitholders are invited to communicate to the Board or its committees by writing to: Board of Directors, Rose Rock Midstream GP, LLC, Two Warren Place, 6120 South Yale Avenue, Suite 700, Tulsa, OK In addition, interested parties may communicate with the Chairman of the Board or with the non-management directors as a group by writing to: Chairman of the Board, Rose Rock Midstream GP, LLC, Two Warren Place, 6120 South Yale Avenue, Suite 700, Tulsa, OK Audited Financial Statements Rose Rock s Investor Relations will provide hard copy audited financial statement free of charge. Please contact: Alisa Perkins investor.relations@semgroupcorp.com Phone:

6 Rose Rock Midstream, L.P. Two Warren Place 6120 S. Yale Ave., Suite 700 Tulsa, Oklahoma Attn: Corporate Secretary 10. Corporate Governance Guidelines and Principles The Board will review these guidelines periodically and make amendment as necessary. These guidelines will be posted on the Partnership s website for communication to the Partnership s unitholders. 6